Five things to know about workers' compensation

Sweeping proposed changes to Michigan's Workers' Compensation law are working their way through the state government. Here's a recap on some basics about the system.

The basics

Most employers in the state must participate in the workers' compensation system.

Generally, they buy insurance to cover workers injured on the job, and when a worker gets hurt the insurer pays the worker a portion of their lost wages during the time they are unable to work.

Workers' compensation is run differently by each state. The only state that allows employers to choose not to participate in a workers' compensation system is Texas.

Five things to know

No right to sue. The reason workers' compensation was adopted (in 1912), was to keep workers injured on the job out of the court system. Even today, in exchange for having a workers' compensation system, workers give up the right to sue their employers for injuries except in very rare cases. Workers do not get their right to sue back, even if workers' compensation benefits are reduced or harder to get.

Fraud. Fraud occurs in any system. Not many studies exist about the workers' compensation system, but the rates are thought to be very low, around 1 to 2 percent. In every workers' compensation system, if an employee is offered their job back or another job they can do, even for lower pay, they have to take it or risk losing their benefits. (The state of Ohio has gotten really serious about cracking down on fraud-you can check out their You Tube channel where they show videos of people they have caught and recovered money from).

How long do benefits last? Injured workers only get workers' compensation benefits for the length of time they are injured. There are some injuries, like the loss of a limb or the death of worker, where there are a certain amount of benefits awarded no matter what. An injury needs to be proven, by a doctor, to be severe in order for a worker to get lifetime workers' compensation benefits (these decrease significantly at age 65). Benefits are calculated based on the average weekly earnings of each worker.

How often to employers fight claims? Employers always have the right to contest a workers' compensation claim. The state of Michigan says few do. Southfield-based workers' compensation attorney Richard Warsh says in his experience, the majority of injured workers go back to their old jobs within a few weeks.

How much does the state pay? State funds are not used to pay injured workers. The state only spends money to administer the system, and to handle disputes over awards between employers and workers. Critics of the new legislation, like Warsh, say that if the law were enacted there would be many more disputes over claims brought by workers, costing the state more money.

The new legislation

The Michigan House of Representatives passed Bill No. 5002 on November 2. That bill includes many changes to the law.

The most controversial are changes to how an injury is defined and how an injured worker's payments are figured out.

The legislation changes the definition of "disability," making it more difficult to prove. It would also reduce the amount of compensation for injured workers. It would take into account what jobs an injured worker could do in figuring out benefits.

Even if the injured worker can't get these jobs, or if these jobs are unavailable, the worker's award would be reduced.

*Correction: An earlier version of this story said Michigan's Workers' Compensation law went into effect in 1917. The correct year is 1912.